Generac has grown a lot since Aaron Jagdfeld took over as chief executive officer in 2008. Its revenue in 2021 is on pace to be around $3.7 billion – more than six times the 2008 total. Net income this year could come close to matching the $574 million in total sales from that year.
Home standby generators were a major part of the Town of Genesee-based company back then, and that’s still the case today. In fact, that core product is responsible for much of Generac’s explosive growth in recent years. With people spending more time at home and more frequent and severe power outages, interest in the product continues to grow.
To keep up with demand, Generac has invested in expanded capacity at its Wisconsin facilities and added a new assembly plant in South Carolina. It also bought the former American Family Insurance building in Pewaukee and sponsored a stage at Summerfest, both to help continue growing its local workforce. The company also opened an office in Boston to attract top tech talent.
At the same time, Generac has made a series of acquisitions to position it for an electrical grid that is more focused on clean and distributed energy. Those deals have included home energy storage, microinverters and monitoring for the solar market, a smart water heater device maker and a propane tank monitoring solution. The company also recently bought smart thermostat maker ecobee in a potentially $770 million deal. Jagdfeld said ecobee’s platform will help Generac bring together all of the energy technology pieces it has to get the most out of them.
For leading Generac to explosive growth and positioning the company for a clean energy future, Jagdfeld is the BizTimes Milwaukee Best in Business CEO of the Year.
Looking back on his tenure, Jagdfeld said one of the biggest lessons has been the importance of thinking about the future – not just where the industry is headed or specific issues in the business but bigger-picture topics that the company refers to as mega-trends.
Jagdfeld said there are two decisions that helped unlock Generac’s current growth. The first was changing the company from a functional to a business group structure centered on specific products and end markets. That gave each of the company’s business leaders more authority to make decisions instead of things filtering up to Jagdfeld, enabling more speed and better focus.
“That was really important in terms of unleashing the potential growth that existed in each of those businesses,” Jagdfeld said.
The other decision was to take a close look at the clean energy space, ultimately acquiring Pika Energy and Neurio Technologies in 2019, and identify a position for Generac as the market changed.
Jagdfed said the company knew the trends around clean energy and climate change but had struggled to identify its role in it. Executives eventually saw the chance to apply the company’s skills in making a market, building a brand and scaling supply chain and manufacturing to the energy storage and monitoring spaces, even though they hadn’t been in those industries previously.
“We just thought that the things that we knew how to do really well would apply to these markets as they grew,” Jagdfeld said. “The one thing we probably got wrong in that whole thing was how fast it would grow. It’s grown a lot faster than we thought, which has been a good thing. If you’re going to be wrong, be wrong that way.”
As Generac has grown, the kinds of decisions Jagdfeld makes have changed. There was a time he’d deal with how many generators to make next quarter and what inventory levels should be. Now, the choices are bigger and focused on the entire enterprise. Some of the questions he faces are more ambiguous, like should the company sponsor a Summerfest stage or what to do about running out of space at Generac’s headquarters.
Jagdfeld said his approach is to understand who a decision impacts, what the company is trying to achieve and the potential downside.
“I’m a finance person by classic training, so I maybe dig into the numbers probably deeper than most CEOs because that’s just my orientation,” he said.
Every decision comes with financial and strategic implications, and Jagdfeld said sometimes that requires freeing yourself from financial thinking to do the right thing strategically or opportunistically.
“Speed is so important in business today that I think making decisions quickly is really, really critical,” he said. “I think as long as you believe, either because of the data or in your heart because you have experience or because strategically something fits that you’re 90% of the way there, the last 10% you’ll figure out as you go.”